Helen Wilkinson was mistakenly labelled an alcoholic after a simple computer error by the NHS. An unknown official at a hospital was updating her medical records and inputted a wrong code. The mix-up meant she was recorded as having received treatment for alcoholism, instead of surgery.

Ms Wilkinson, 40, was furious and began a campaign to have all information about her permanently removed from the hospital's databanks. But she ran into a problem: the NHS already keeps electronic records on everyone who receives treatment from the health service, whether they are seen by a GP or at a hospital.

She succeeded in her campaign only because she took drastic action - she withdrew from the NHS altogether so that her records were deleted. Now she is refusing to be treated on the NHS ever again if her personal details are stored on an NHS computer. "I am putting myself at risk. I am not going back on a database if it kills me," she said.

Her case highlights two problems which are likely to grow with the government's plan to create a national database for all patient medical records.

Firstly, millions of patients will inevitably have mistakes in their computerised records which will in the future be read by more people than in the past. The government has not yet delivered on a promise that patients will be able to check their records on the internet for mistakes. Officials say that "there is no firm date yet".

Secondly, there is an unresolved question of whether patients who refuse to go on to national databases will still be allowed to receive treatment.

Ms Wilkinson's campaign has caused headaches for ministers and senior health officials, and has come to the attention of Downing Street advisers.

It started two years ago when she read about the government's £12bn plan to put everyone's medical records on one computer. "I thought that I did not like the sound of that and would like to opt out. I thought it would be easy," she said. Ms Wilkinson, of High Wycombe, Buckinghamshire, knew her way around the NHS as she had been a health service manager for 20 years.

As she started to investigate, she wanted to see what information was stored on her in NHS records. She asked for copies of these records, but when they came back, she was in for a shock.

She discovered that the mistake about being an alcoholic had occurred after a hospital visit in 1988 and therefore been on her records ever since. "I went ballistic. To be labelled an alcoholic - who had seen it ? Who knows, literally hundreds could have seen it," she said.

Ms Wilkinson, who is a local councillor, was distressed to find out that the records had been distributed among several NHS bodies, such as her primary care trust and the strategic health authority. "I have lived locally for a long time. I know a lot of people who work in the NHS. They could have seen it."

She was also angry that the records had been shared with a private company which distributes personal medical records to academic researchers.

In 2003 she was contacted by researchers a week before she was due to have an operation. She believes people who are about to have an operation are in a vulnerable state, and that researchers should ask GPs first whether it is appropriate to approach a patient.

She also maintains also that the detailed data contained in medical records could become sensitive at a future point - for example, during a messy divorce.

Her battle to have her records deleted from all NHS computers took nearly two years to win, and needed the help of her MP, Paul Goodman, who raised her case in a parliamentary debate.

Citing the Data Protection Act, she argued that the NHS was causing her "unwarranted and substantial distress" by storing data on her. At first, the Department of Health did not know how to react. Officials said her request was "neither simple nor straightforward".

But after much argument, she received confirmation in July from a senior health official that her "data has been removed from all centrally managed databases". However, the department said this was a special case, and did not set a precedent.

Since withdrawing from the NHS, she has been treated by her GP, who is in effect seeing her for free. But undoubtedly she will have to be treated for more serious illnesses by specialist doctors.

She blames the government for failing to resolve the conundrum of how to treat her without creating electronic records on her.

Yesterday the Department of Health said the case "illustrates many of the reasons why we need to modernise NHS IT systems. We have to have information about patients to be able to treat them safely and effectively and can never entirely eliminate human error, but the new systems and controls will improve the way information is handled."

Privacy campaigners who support her say the government is not entitled to circulate patients' medical records without consent, and that the entire scheme to set up a national "spine" of such records may be illegal.

Dr Fleur Fisher, one of the trustees of an online thinktank, the Foundation for Information Policy Research, and former head of the British Medical Association's ethics division, describes the project as "data rape". Patients are being urged to write to their GPs and boycott the system. Yesterday, the Guardian disclosed that next year the health department intends to start to upload millions of medical records on to the spine without patient consent, unless there is a rethink. A taskforce is due to report to the health minister Lord Warner before Christmas on ways to resolve the crisis.